The head of the Saudi Data and Artificial Intelligence Authority (SDAIA), Dr. Abdullah bin Sharaf Al-Ghamdi, said that the next stage requires transforming the common principles of artificial intelligence ethics into practical application, through implementable policies and effective risk management tools.
Al-Ghamdi added, during the opening of the Fourth UNESCO Global Forum on Artificial Intelligence Ethics in Riyadh, that “in light of the concerns recently expressed by the leadership of major companies about the acceleration in the development of advanced artificial intelligence technologies (Frontier AI), and their repeated calls to curb and rationalize this acceleration, the next stage requires building on these common principles and transforming them into practical application.”
He explained that this requires “implementable policies, effective risk management tools, and institutional capabilities that enable countries to implement them in their reality.”
Al-Ghamdi said that this trend “does not necessarily mean that countries adopt a unified model,” explaining: “Rather, we start from common principles and exchange experiences and tools while respecting each country’s priorities and culture.”
Regarding the aspect related to enabling countries to benefit from technology, Al-Ghamdi said: “Governance should not be separated from empowerment; “Countries need the frameworks as well as the skills, data, and infrastructure that enable them and maximize the benefits of adopting artificial intelligence technologies.”
He pointed out that in 2026, Saudi Arabia launched the “National Framework for Artificial Intelligence Risk Management” and “Artificial Intelligence Ethics Markers,” as part of a trend that makes governance and risk management part of adopting artificial intelligence technologies.
Al-Ghamdi stressed that the importance of the forum is to move “from agreement on principles to the ability to implement them,” stressing that international cooperation should focus on capacity building, not just dialogue.
As the Federal Reserve approaches its first decision to raise interest rates in three years, its Chairman, Kevin Warsh, is not facing the traditional inflation battle that can be easily resolved by weakening demand. The wave of price increases facing the American economy today is increasingly fueled by factors outside the scope of monetary policy, from the jump in oil prices due to the war in the Middle East, to customs duties, through the boom in investment in artificial intelligence and data centers.
This equation puts the Fed before a precise test: How does it use its main tool to curb inflation, without pushing the economy into a sharp slowdown in an attempt to address shocks whose sources it cannot control?
The markets have almost made their bet on Wednesday's decision; Futures price a near 90 percent probability of raising the interest rate target range by 25 basis points to a range of 3.75 to 4 percent. But the importance of the meeting does not lie in the increase itself as much as in what Warsh’s tone will reveal about the next path, at a time when the yield on 10-year US Treasury bonds has exceeded the 5 percent level, and the cost of borrowing across the economy has risen to levels that put pressure on companies, families, and the government.
Different inflation
In the previous tightening cycle, the Fed’s mission was more direct: to raise interest rates between 2022 and 2023 in an attempt to curb demand and slow economic activity, as part of a policy that contributed to alleviating inflationary pressures after they reached their highest levels in 4 decades. By 2025, inflation had approached the Fed's target of 2 percent.
Today, the nature of the problem has changed.
Oil prices rose strongly with the escalation of the US-Iranian war, while the average price of diesel in the United States reached a record level of $6.27 per gallon. At the same time, tariffs are adding pressure on commodity prices, while massive investments in artificial intelligence and data centers are pushing demand for energy, infrastructure and capital even higher.
These three factors cannot be removed by the Federal Reserve by raising interest rates.
As the Federal Reserve Chairman in Richmond, Tom Barkin, said last May, raising interest rates to weaken demand does not address the roots of inflation resulting from a supply-side shock. It does not reopen trade routes, restart factories, or address shortages of goods caused by supply disruptions.
But the problem for the Fed is that ignoring these shocks could be costly if they begin to transform from temporary price increases into more established inflationary expectations.
Why does Warsh raise interest then?
Here lies the basic irony of Wednesday's meeting.
Raising interest will not directly lower the price of oil, nor will it eliminate customs duties, but it can limit the transmission of the price shock to the rest of the economy by slowing demand and preventing inflation from taking hold in the behavior of companies and consumers.
This is precisely what makes inflation expectations a pivotal element in Warsh's decision.
Recent polls indicate that consumers do not expect high inflation to continue for a long time, which gives the Fed room to consider part of the wave of rising prices temporary. But continuing to rise in energy and commodity prices for a longer period may change these expectations, especially after years of high inflation that made companies and consumers more quick to adjust prices.
Christine Forbes, an economist at the Massachusetts Institute of Technology, told the Associated Press that the risks of continued inflation are greater than the risks of its rapid decline, noting that consumers and companies have become more sensitive after the experience of recent years, which may prompt them to raise prices at a faster pace.
The battle for credibility
Therefore, the decision to raise interest rates may not only be directed at current inflation, but also at the credibility of the Fed in the future. Fawarsh, who stressed in his speech during the Jackson Hole conference last month that the latest data do not show sufficient improvement in the basic trends of inflation, put himself before a practical test. If he raises interest rates on Wednesday, he will prove that his warnings were not just messages to the markets.
However, if he refrains from raising despite these statements, the markets may face a different question regarding the extent of the central bank’s willingness to use its tools if inflation remains high.
This is especially important in the bond market.
Investors look not only at the short-term interest rate, but also at the expected path of monetary policy and inflation over the years. The 10-year Treasury bond yield exceeded 5 percent, recording its highest levels since 2007, while the 30-year bond yield rose to about 5.39 percent.
Thus, the Fed faces another paradox: Raising interest rates may weaken the economy in the short term, but it may, in return, help contain the rise in long-term bond yields if it convinces investors that it is serious about returning inflation to its target.
Oil tests the limits of monetary policy
But oil remains the most clear test of the limits of the Fed’s tools. The rise in crude prices does not appear only in the fuel bill, but is also gradually transmitted to the costs of transportation, shipping, production, and services. The longer the rally lasts, the more likely it is that it will move to broader prices.
Here the role of monetary policy becomes indirect: the Fed cannot increase oil supplies, but it can try to prevent rising energy prices from creating a second wave of inflation through demand, wages, and expectations.
Ryan Sweet, chief global economist at Oxford Economics, told Investopedia that three of the most prominent sources of inflation above the Fed’s target are the Middle East war, the investment boom in artificial intelligence, and customs duties, which are pressures that the central bank cannot address directly by raising interest rates.
Artificial intelligence adds a new equation
The dilemma doesn't stop at energy.
The boom in spending on data centers and artificial intelligence infrastructure has become an important factor in the American economy. Not only through demand for chips, energy and equipment, but also through its impact on investment, growth and long-term bond yields.
Here, the “federalist” finds itself faced with a very complex equation. If investment in AI continues to be strong, it could keep demand high and increase price pressures. However, if the boom slows sharply, investment and growth may decline, which changes the calculations towards a more accommodative monetary policy.
That is, one of the current sources of inflation could turn, if it suddenly slows, into a source of pressure on growth.
One lift or the beginning of a path?
For this reason, the most important question after Wednesday’s decision may not be whether the Fed will raise interest rates, but rather: what will it do next?
Markets are already pricing in continued tightening, with expectations of three increases in September, December and March. But pricing these increases does not necessarily mean that the Federal Reserve has decided to start a new tightening cycle.
Wednesday's hike, as some economists see it, may be a risk-management measure aimed at underscoring the bank's commitment to bringing inflation back to its target, even as it expects some supply shocks to fade over time.
On the other hand, if the Fed Chairman presents the decision as the beginning of a path to restore monetary policy to a more stringent level, the markets may reprice the upcoming increases, raising bond yields, increasing the cost of borrowing, and putting pressure on stock valuations.
The chief American economist at Deutsche Bank, Matthew Luzetti, believes that raising interest rates once is rarely enough to make a tangible impact on the economy, which makes the Fed’s language regarding the next steps more important than the first increase itself.
The real test for Warsh
Ultimately, Warsh does not face a simple equation between curbing inflation and supporting growth. Rather, he faces a more complex test: How does he use monetary policy to confront inflation whose driving supply shocks interfere with the strength of demand, inflation expectations, and financial market conditions?
Raising interest will not directly reduce oil prices, will not cancel the effect of customs duties, and will not stop the investment boom in artificial intelligence. But it remains the tool available to the Fed to prevent these shocks from moving to more established price behavior, or to inflationary expectations that are difficult to curb later.
This is why Warsh's message after the decision may be more important than the size of the increase itself. If he convinces markets that the tightening is measured and proportionate to inflation risks, and that it is not aimed at weakening the economy more than necessary, he may succeed in containing the pressures without causing a sharp slowdown.
However, if raising interest turns into a long series of increases in the face of inflation fueled primarily by factors that do not fall within the scope of monetary policy, the battle may shift from reducing inflation to preventing the treatment of inflation from becoming a new source of weak growth and the labor market.
The Warsh test is not limited to this economic equation; His decision also comes in light of political pressure from President Donald Trump to lower interest rates, which makes any new tightening path a test of the Fed Chairman’s ability to balance containing inflation and preserving the independence of the central bank.
Here lies the real test for Warsh: to prove that monetary policy is determined according to the path of inflation and the economy, not according to political pressures, and to determine at the same time when interest is an effective tool for curbing inflation, and when using it to confront supply shocks becomes more economically costly than its benefit.
